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If there are two non-callable $1,000 bonds that pay semi-annual interest, one with a 30-year maturity and the other with a 15-year maturity and both
If there are two non-callable $1,000 bonds that pay semi-annual interest, one with a 30-year maturity and the other with a 15-year maturity and both with a coupon rate of 9%, what will happen to their values if market interest rate drops to 8%?
Group of answer choices
d) The value of the 30-year bond will be $53.33 lower than the 15-year bond
e) Their values will be the same because their coupon rates are the same
b) The value of the 30-year bond will be $26.66 lower than the 15-year bond
c) The value of the 15-year bond will be $53.33 lower than the 30-year bond
a) The value of the 15-year bond will be $26.66 lower than the 30-year bond
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